End of Net Neutrality May Upend Digital Marketing

Repeal of net neutrality could have a devastating impact on digital marketing.

Under current net neutrality rules, internet service providers (ISPs) like AT&T, Comcast, Sprint, Time Warner and Verizon, must treat all internet traffic equally. Websites that marketers help develop and promote enjoy the same potential audience as websites of internet giants.

A proposal from FCC Chairman Ajit Pai would repeal net neutrality and let ISPs give preferential treatment. ISPs could create Internet “fast lanes” and charge more for heavier users of broadband such as streaming video providers. Proponents say repeal of net neutrality will encourage innovations and broadband investments. It’s only fair, they say, to charge high bandwidth users like Netflix more.

Free markets work best when there are many, many competitors offering the same products or services. Where there are a limited number of suppliers, lack of competition in free markets generates higher fees. That’s why electric utilities and telecoms are highly regulated with their regulators controlling their end-user prices. Like electric utilities and telecoms, there are a limited number of broadband providers.

The End of the Open Internet?

Opponents warn that the end of net neutrality will create an unequal playing field and threaten free markets. “Small businesses and startups that can’t afford a fast lane will find it harder to compete; those that can’t afford the access fees won’t be able to compete at all,” warns Barbara van Schewick, Stanford Law School professor and director of the Stanford Center for Internet and Society.

ISPs would be free to block, speed up or slow down websites and applications they view as competitors. ISPs in Portugal and the UK, which lack net neutrality, do indeed favor their own content and partners over third parties, opponents note.

Verizon and its mobile subsidiary, Verizon Wireless, could block other online news services, since Verizon Communications owns Yahoo News, warns Barry Levine at Third Door Media. AT&T could change more for streaming video providers, giving YouTube a huge advantage over small players. Ultimately, the increase in charges would be passed on to advertisers and paid subscribers.

A Blow for Freemium Marketing

Freemium marketing could suffer, Levine says. Marketers now offer free services for trials or to upsell customers to paid products. Without net neutrality, ISPs could block free services if they offer similar or competing products.

Adam Heitzman, co-founder of HigherVisibility, takes an even more pessimistic view. Businesses turn to digital marketing professionals to promote their websites, creating high demand for online services like SEO, content marketing, social media marketing and pay-per click services, Heitzman writes in Inc.

A Screeching Halt for Digital Marketing?

“The digital marketing industry, which is worth around $80 billion, would come to a screeching halt in a non-neutrality scenario,” Heitzman says perhaps somewhat apoplectically. “By its very nature, non-neutrality would destroy the competition that net neutrality has facilitated for years.”

Others agree that marketers and small businesses should be worried about net neutrality repeal. “It’s going to fundamentally change the way (marketers) can approach digital media, the ROI they can extract for it and even what partners they should be looking to and considering,” Joshua Lowcock, U.S. executive vice president and chief digital and innovation officer at UM, told Adweek.

The FCC is expected to approve the measure on a party-line vote when it meets Dec. 14. The proposal produced mammoth opposition. According to a poll this summer, 77 percent of Americans, including 73 percent of Republicans and 80 percent of Democrats polled, favor current net neutrality rules. But the FCC has shown it doesn’t care much for public opinion or public input. Observers expect the issue to head to the courts after an FCC decision.

Bottom Line: The proposed end of net neutrality will create great difficulties for digital marketers if enacted. High-costs of the internet fast lane may create a roadblock for some organizations. Many marketers will face substantial hurdles when promoting their websites or apps if ISPs give their companies unfavorable treatment. ISPs may block or otherwise hinder internet access if they view companies as competitors.

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William J. Comcowich founded and served as CEO of CyberAlert LLC, the predecessor of Glean.info. He is currently serving as Interim CEO and member of the Board of Directors. Glean.info provides customized media monitoring, measurement and analytics solutions across all types of traditional and social media.

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